Political Violence, Security and Stability: Civil War and Foreign Direct Investment in Sudan

It is often argued that civil war has acutely negative effects on a country’s ability to attract Foreign Direct Investment (FDI). Underpinned by a liberal understanding of war and development, much of the relevant literature assumes that political violence has the propensity to create insecurity and instability that deters foreign investment, which in turn severely inhibits economic growth. However, at best, the evidence from existing scholarship is inconsistent and, on the whole, the evidence does not support the assumed negative relationship between civil war and FDI. Moreover, nascent scholarship has observed that FDI enters countries with internal armed conflicts unabated; other studies show that some civil war economies exhibit significant increases in FDI during conflict. A liberal paradox has arisen, with such trends described as surprising, counter-intuitive and curious. In contrast, a critical framework can provide insights into this paradox. This critical framework acknowledges that processes of economic development such as inflows of foreign investment can be accompanied and facilitated by violence, with violence creating a particular form of security and stability that is conducive to FDI inflows. This paper aims to investigate these claims to better understand why FDI can exhibit increases in some civil war economies. By examining the Second Sudanese Civil War (1983-2005) – a country which exhibited strong increases in FDI during phases of the conflict – this article argues that particular types of violence perpetrated by the government’s armed forces and pro-government militias, groups which were sympathetic to the interests of key investors in the oil industry, facilitated FDI in Sudan’s oil sector during the 2000s to the detriment of large swathes of civilians affected by the violence. This article nevertheless assumes a “fluidity of civil war violence”, suggesting that civil war violence is neither inherently beneficial nor detrimental to FDI but instead has fluid economic effects during the life of given conflict.